Introduced in September 1991, the Direct Subsidy Scheme (DSS) was set up in response to the recommendations of the Education Commission in its Report No. 3 and approved by the Executive Council. Under the DSS, schools are allowed to have greater flexibility in various areas including resources deployment, curriculum design and student admission, etc. Besides government subsidies, DSS schools may collect school fees for the provision of additional support services and school facilities. The new measures to further improve the terms of the DSS since the 2001/02 school year are contained in the Education Bureau (EDB) Circular Memorandum No. 210/2001 (16 KB).
The objective of the DSS is to inject more variety into our school system and to enhance parental choice.
Number of schools
As at September 2022, there are 71 (771 KB) (including 50 secondary, 12 primary and 9 secondary-cum-primary) schools under the DSS.
Basic Features of the DSS
A recurrent government subsidy in the form of a block grant is paid to each DSS school. The amount of the subsidy (i.e. the DSS subsidy) is calculated based on the DSS unit subsidy rate (i.e. the average unit cost of an aided school place) and the number of enrolment of a DSS school. Starting from the 2001/02 school year, a DSS school would continue to receive full subsidy from the Government until its fee level reaches 2 1/3 (two and one-third) of the DSS unit subsidy rate (X). Beyond this level, the Government will not provide any recurrent subsidy. If a DSS school charges a fee between 2/3 (two-third) of X and 2 1/3 (two and one-third) of X, it should set aside 50 cents for its fee remission and scholarship scheme for every additional dollar charged over and above 2/3 (two-third) of X.
Method of Subsidy
The amount of subsidy allowed for an existing DSS school is based on a two-age category system (9 KB) relevant to the operating history and calculated in terms of the average unit cost of an aided school place for each eligible student enrolled. Non-local students are not eligible for DSS subsidy.
DSS schools are allowed to charge an amount of school fees as printed on the fees certificate issued by the EDB. DSS schools are required to offer to parents a fee remission and scholarship scheme with a set of eligibility benchmarks no less favourable than the government financial assistance schemes for students in order that students will not be deprived of the chance to attend DSS schools solely because of their inability to pay fees. DSS schools are required to set aside at least 10% of their school fee incomes for the fee remission and scholarship scheme. Full details of the fee remission and scholarship scheme should be shown in the school’s prospectus, admission application form, school website, etc. to increase the transparency and access to information of the fee remission and scholarship scheme. DSS schools are required to observe the EDB Circular No. 10/2012 of 22 June 2012 on "Fee Remission / Scholarship Schemes in Direct Subsidy Scheme (DSS) Schools".
Since DSS schools may admit their own students, they are allowed greater flexibility to establish reasonable and professionally sound criteria for admission of students which are consistent with their own tradition and educational objectives. However, DSS schools should ensure that parents are well aware of these admission criteria.
Besides, DSS schools in receipt of government subventions are also required to observe the age threshold in their admission of students. DSS schools would not be entitled to receiving the respective government subsidies for any attendees not reaching the age of 5 years 8 months as at 1 September of the year of entry to Primary One.
To meet the policy objective of catering for different needs of students and coping with the fast-changing demand of society, DSS schools are allowed to have greater flexibility in curriculum design than public sector schools. Nevertheless, DSS schools are still required to offer principally a curriculum targeted at local students and prepare them for local examinations.
Control and Monitoring Mechanism
To ensure that DSS schools meet the services and operating standards required, control and monitoring mechanism will be instituted. This comprises both compliance vetting and quality assessment –
(A) Compliance Vetting
The purposes of compliance vetting are:
(B) Quality Assessment
The purpose of quality assessment is to provide an external review on the performance of DSS schools as a whole. The EDB may assess the performance of DSS schools by conducting -
A Comprehensive Review will be conducted after the first 5-year period of a school’s admission into the DSS, taking into account findings in the compliance vetting and the quality assessment.
After the application for joining the DSS has been approved in principle by the EDB, the School Sponsoring Body (SSB) of the applicant school is required to enter into an SSB Service Agreement with the Government before the applicant school is officially admitted to the DSS. Within one year after the school has commenced operation under the DSS, the School Management Committee (SMC) / Incorporated Management Committee (IMC) of the applicant school is required to enter into a renewable SMC/IMC Service Agreement with the Government. The SMC/IMC Service Agreement will be renewed subject to EDB’s satisfaction with the performance of the school.
Admission to DSS
All aided secondary and primary schools are eligible to apply. School sponsors may also apply for allocation of government-built school premises to operate DSS schools. Schools admitted to the DSS will operate as local DSS schools offering principally a curriculum targeted at local students and preparing them for local examinations.
To allow sufficient time for this Bureau's vetting work and to tie in with the admission cycle of the Secondary School Places Allocation System / Primary One Allocation System, schools intending to apply for joining the DSS have to submit their application by the end of February in the year prior to the planned year of admission to the DSS, at the latest. For example, if a school intends to apply for joining the DSS in September 2025, it is required to make an application to this Bureau before 29 February 2024. Applicant schools should submit their application, together with supporting materials, to the following address:
School Administration Division
5/F., East Wing, Central Government Offices,
2 Tim Mei Avenue, Tamar, Hong Kong
When considering whether their schools should join the DSS, aided schools are advised to note the arrangements upon turning into DSS schools as detailed in Notes for Aided Primary Schools (74 KB) and Notes for Aided Secondary Schools (72 KB). Before making an application, an applicant school should consult its stakeholders, such as parents, teachers and alumni, and duly address their concerns. In particular, the school should make known to parents the transitional arrangements when it is converted to a DSS school. For enquiries, please contact the School Administration 1 Section on 3509 7464.